Now, he may have to give it all back.
Legal experts say Musk likely will be forced to return at least some of the stock options he secured as part of his 2018 pay package, an award that was — and remains — unparalleled in scope. “The plan is the largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude,” Chancellor Kathaleen McCormick wrote in her opinion, “over 33 times larger than the plan’s closest comparison, which was Musk’s prior compensation plan.”
No matter how much Musk had to give up to pursue his many other ambitions, he could always trust that additional shares from the lucrative Tesla package were around right the corner. Now, legal experts said, McCormick’s ruling almost certainly will require Tesla to devise a plan to hand back Musk’s stock options. Wall Street is still grappling with the gravity of the decision.
This could be “a historical moment in the Tesla story,” said Daniel Ives, managing director with Wedbush Securities. But “the board,” he added, “is not going to lay down and let the Delaware court decide the future of Tesla.”
The news comes at a difficult time for Musk. His Tesla stake is now around 13 percent, well below the nearly 22 percent he controlled when the compensation plan was struck. It has dwindled as he sold stock to cover tax bills and other financial obligations since his $44 billion purchase of Twitter in 2022. Meanwhile, Tesla — which rose like a rocket to become the world’s most valuable automaker in 2020 — is encountering new challenges, including stagnating revenue from steep price cuts and the prospect of softening demand for its electric vehicles.
Musk faces more than financial losses. The nation’s premier business court ruled that members of Tesla’s board were “beholden” to him in a flawed compensation process that he heavily influenced. That ruling strikes at his power, his reputation and his carefully cultivated image as a rakish but brilliant entrepreneur and tactical genius.
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